Day Traders Diary


The stock market rallied on Tuesday, with the S&P 500 (+0.5%) posting its second consecutive gain as eight sectors ended in the green. Momentum names, meanwhile, rebounded from yesterday's relative weakness, which allowed the Nasdaq Composite (+0.7%) to finish ahead of the benchmark index.
Equity indices began the session on an upbeat note, slowly building on their early gains throughout the afternoon. The energy sector (+0.4%) powered the opening advance thanks to better than expected earnings from BP (BP 50.29, +1.25) and Valero Energy (VLO 56.84, -1.13). BP surged 2.6%, while Valero displayed early strength, but spent the session in a steady retreat from its opening high, which mirrored the price action of the entire sector.
The solid early gain in the energy sector kept the S&P 500 in the green during the first hour of action, while the Nasdaq briefly dipped into the red. The short-lived weakness in the tech-heavy index resulted from the underperformance of top-weighted components, but those names were able to rebound. For its part, the broader technology sector advanced 0.7%, finishing only behind the financial sector (+1.0%).
The economically-sensitive financial sector drew strength from a slew of top components, with Bank of America (BAC 15.24, +0.29) leading the charge. The stock gained 1.9% following yesterday's 6.3% loss. International financials had an even better showing, with Deutsche Bank (DB 44.45, +0.88) gaining 2.0% after reporting above-consensus results. Also of note, Standard & Poor's lowered the ratings of 15 European banksincluding Deutsche Bankto 'Negative' from 'Stable,' but the stock saw little reaction to the news.
In addition to receiving support from two of its largest sectors, the market was also underpinned by the health care space (+0.6%), where Dow component Merck (MRK 58.72, +2.04) rallied 3.6% in reaction to its bottom-line beat. Biotechnology, meanwhile, played along today as the iShares Nasdaq Biotechnology ETF (IBB 229.09, +6.03) gained 2.7%.
On the downside, consumer staples (-0.4%) and utilities (-0.4%) posted modest losses, with the utilities sector narrowing its 2014 gain to 13.4%.
Treasuries finished the session with slim gains, punctuating their session-long retreat from overnight lows. As a result, the benchmark 10-yr yield slipped one basis point to 2.69%.
Participation was essentially in line with average as 724 million shares changed hands at the NYSE floor.
Today's economic data featured two reports:
The Conference Board's Consumer Confidence Index fell to 82.3 in April from an upwardly revised 83.9 (from 82.3) in March. The consensus pegged the Consumer Confidence Index at 83.5. The Present Situation Index fell to 78.3 in April from 82.5 in March. The Expectations Index increased slightly, from 84.8 in March to 84.9 in April. The overall decline in confidence was a little unusual. Typically, confidence levels trend with employment conditions, equity prices, gasoline costs, and media reports. Extremely low layoff levels coupled with a generally rising stock market in April resulted in a large increase in the University of Michigan Consumer Sentiment Index. Those factors were expected, yet they failed to push the Consumer Confidence Index higher.
The Case-Shiller 20-city Home Price Index for February rose 13.2% while a 13.0% increase had been expected by the consensus. This follows the previous month's increase of 13.2%.
Tomorrow, the weekly MBA Mortgage Applications Index will be released at 7:00 ET and the ADP Employment Change for April ( consensus 215,000) will be announced at 8:15 ET. The advance reading of Q1 GDP ( consensus 1.0%) will be released at 8:30 ET, while the Chicago PMI report (consensus 56.5) for April will cross the wires at 9:45 ET. Finally, the Federal Open Market Committee will release its latest policy directive at 14:00 ET.

S&P 500 +1.6% YTD
Dow Jones Industrial Average -0.3% YTD
Nasdaq Composite -1.8% YTD
Russell 2000 -3.6% YTD

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